And now, another in a long line of Modest Proposals …
Trenton should sell the Trenton Water Works. Not because the city can’t handle the job of running the operation, but because it makes good financial sense. That, and no one is really sure if the city can handle the job of running the operation.
Hamilton Mayor Kelly Yaede has been one of a number of outspoken critics of TWW, most recently in a letter she sent to Gov. Phil Murphy, demanding the state take action and force the city to sell the utility. Why? This time, because of “historically low” chlorine levels in the Hamilton tower, this on the heels of the most recent boil water advisory.
“The time for the State of New Jersey and Trenton Water Works to fulfill their obligations to the citizens of Hamilton Township is long overdue,” Yaede wrote in the letter. “Trenton Water Works has continuously failed to meet its responsibilities; therefore, the time has come for the State of New Jersey to finally compel the sale of the system.”
So there’s that.
There’s also this: I’m a TWW customer, and no, I no longer drink the water. I mean, I’ll take a slug of it now and again, but it’s not my main source of drinking water. Too many missteps at this point for me to trust it.
I know I’m not alone. Saw on Facebook some guy say his wife sells houses in Hamilton, and is often asked by prospective buyers what water company services the house.
Clearly, TWW has at best, an image problem, and at worst, a getting-clean-water-to-customers problem.
So again: The city should sell. It makes financial sense.
Now about a decade and change ago, then-Mayor Doug Palmer wanted to sell a chunk of the utility, namely the suburban lines. Voters overwhelmingly turned it down. The appetite to sell the whole kit and kaboodle, then, is obviously not there.
But why not? Even a cursory look at the numbers shows keeping TWW is a bad financial decision.
Consider: The utility ran a $3 million surplus last year. Which is good. But “surplus” does not equal profit. It equals surplus, much of it that gets plowed back into the utility. In fact, between orders from DEP, the lead pipe replacement program, the order to install covers over the reservoir, and assorted other must-fixes, the city will be forced to spend tens of millions of dollars over the next decade or so, according to one whisper in my ear.
Another whisper in my ear is this: The utility could probably fetch $200 million on the open market. And let’s say that $200 million gets locked away, under an ordinance that can’t be broken, and invested with a ridiculously modest 5% rate of return.
That’s $10 million in interest a year, free and clear. Not a $3 million surplus with a long horizon of must-fixes and who-knows-what’s, but $10 million a year. Again, free and clear.
Why is this a bad idea? Truth is, it’s not. It’s a great idea. There is no other way to spin it other than this: The city would make more money a year without the utility than with it.
I’m sure I’ll be hearing from people who can take the numbers and spin them another way, as numbers are wont to do. But my very-simple back of the envelope math ain’t wrong. Sell TWW, lock the money away, peel the interest off each year, remove current and undoubtedly future headache. (And yes, the “lock the money away” part is critical; can’t have any mayor or council blowing through that.)
Of course, selling the utility to a private company doesn’t mean things will necessarily be better for consumers. Water prices would almost certainly rise. And no promises things are always clean; private water companies have problems also.
But the city – which bought the utility back in 1859 for $88,000, or a little less than $3 million in today’s dollars – would almost certainly be better off without TWW. More money, less headaches. And quite a tidy profit.
